Why the Affordability Crisis Is Most Severe in California

The state’s policies make it inevitable that prices will rise, especially for housing and energy

By Allysia Finley. Excerpts:

"the four metro areas where prices on average have increased by more than 3% [are] Philadelphia (3.3%), Los Angeles (3.6%), San Diego (4%) and Riverside, Calif. (4.5%)."

"Among the reasons for higher CPI readings in California’s metro areas are fast-rising housing costs."

"Yet the housing supply in Riverside . . . hasn’t kept up with demand." 

"Blame . . . environmental laws and strict zoning"

"Shelter prices have risen by 4.4% in Riverside and 5.6% in San Diego over the preceding 12 months, versus 0.1% in Dallas and 1.1% in Houston. In Phoenix, shelter prices have declined by 0.1%."

"Only 118,000 building permits for new homes were issued for the Los Angeles metro region (population 12.8 million) between 2021 and 2024, versus 163,000 in Atlanta (6.3 million), 187,000 in Phoenix (5.1 million), 276,000 in Houston (7.5 million) and 281,000 in Dallas (8.1 million)."

"The state’s melange of climate policies have driven up energy prices in San Diego (8.7% year over year), Riverside (7.9%) and Los Angeles (7%), even as they have been falling in places like Atlanta (by 2.3%), Phoenix (0.8%), Detroit (3%) and Houston (3.4%) that haven’t sought to banish fossil fuels."

"The Perryman Group estimates its local “tort tax” at $3,658 a person."

"Mandatory insurance costs make up about 45% of the average Uber fare in Los Angeles County, versus 10% or less in most places in the country."

"The cost of eating out has climbed by 14.4% in San Diego and 12.4% in Riverside since September 2023, when Democrats increased the state minimum wage for fast-food employees to $20 an hour. Restaurant prices nationwide have increased only 8.3%."